Brazil Election Jitters May Hit Investments in 2014

MarineLink.com
Tuesday, April 08, 2014

Brazil's presidential vote will likely delay some investment decisions this year but spending on infrastructure is expected to remain strong, a senior government official told Reuters.

Although President Dilma Rousseff is the favorite to win the Oct. 5 general election, many investors could withhold funds until the next government outlines its plans for the following four years, which could hamper the country's already slow economic growth.

"It is obvious that businesses will delay some investments until after the election to have more clarity," said the official, who asked not to be named because he is not allowed to speak publicly.

"But investment in infrastructure will not be affected because a lot of that construction is already under contract."

The official, who is involved in economic policy decisions, said the government expects investment commitments of about 100 billion reais ($45.48 billion) between 2014 and 2015 in roads, ports, airports, power generation and distribution projects.

That figure was close to $83 billion in 2013.

Rousseff, a left-leaning technocrat, launched a multibillion dollar infrastructure package in 2012 precisely to bolster investment, which is one of the main bottlenecks holding back the economy of the once-booming emerging-market star.

Investments in Brazil jumped 6.3 percent last year, but as percentage of GDP it remains stuck at only 18 percent, which is less than half of China's investment rate.

The central bank cited a sharp drop in investment as one of the reasons it revised down its economic growth forecast to 2 percent in 2014 from 2.3 percent. The economy has expanded on average about 2 percent per year since 2011, a far cry from the 4-percent growth rates of the past decade.

The political climate in Brazil is considered the biggest deterrent for investment after high taxes and red tape in a survey of foreign and local investors released in January by international accounting firm KPMG.

The elections, in which governors and lawmakers will also be elected, already had an impact on the value of local assets.

A drop in Rousseff's popularity in recent weeks helped spark a rally in local stocks. The decline raised hopes among investors that Brazil could see changes in policies that they blame for destroying the market value of state companies and undermining the economy.

The stagnation of investment in Brazil has more to do with a series of business barriers known here as Custo Brasil or "Brazil Cost," which includes high taxes, cumbersome red tape, faulty infrastructure and scarcity of qualified labor.

"Potential investors are asking more questions about political risk in Brazil since the drop in Rousseff's popularity," said Maria Luisa Cravo, investment manager at business promotion agency ApexBrasil.

But ultimately the most important factor holding back investors is not politics but the difficulty of doing business in Brazil, which is undermining the nation's ability to compete.

"There will be a downward trend in direct investment in the next few years due to the Custo Brasil, rising interest rates and the very high cost of labor," she said.

(By Alonso Soto and Luciana Otoni; Additional reporting by Anthony Boadle; Writing by Alonso Soto; Editing by Lisa Shumaker)

 

Maritime Reporter March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Offshore

JV Wins $2bln Freeport LNG Contract in US

A joint venture (JV) between CB&I, Chiyoda International and Zachry Industrial has won a contract worth over $2bn from FLNG Liquefaction 3 for a liquefied natural

Feds Delay LNG’s Port Ambrose Application

The US Coast Guard and the US Maritime Administration (MARAD) have temporarily suspended their review of the proposed Port Ambrose deep-water LNG import terminal.

Nations Convene for Arctic Maritime Discussion

Citing an increasing need to ensure safety, security and stewardship of Arctic waters, member countries of the Arctic Council gathered at U.S. Coast Guard Headquarters

Finance

JV Wins $2bln Freeport LNG Contract in US

A joint venture (JV) between CB&I, Chiyoda International and Zachry Industrial has won a contract worth over $2bn from FLNG Liquefaction 3 for a liquefied natural

Puerto Rico Readies for Largest Cruise Ships

Thanks to a pier expansion and enhancement, Puerto Rico will welcome the two largest cruise ships in the world, Royal Caribbean International’s Oasis of the Seas and Allure of the Seas, in 2016.

Carnival Sails to Profit

The world's largest cruise company Miami-based Carnival Corp reported a net profit of $49 million, or 6 cents per share in the first quarter ended Feb. 28.   That

Energy

Feds Delay LNG’s Port Ambrose Application

The US Coast Guard and the US Maritime Administration (MARAD) have temporarily suspended their review of the proposed Port Ambrose deep-water LNG import terminal.

Austal Graduates 48 4-Yr Apprentices

Austal USA combined two classes to graduate a total of 48 members of Austal’s cutting-edge four-year apprenticeship program yesterday at a formal ceremony held at the Arthur R.

Mexico Unveils National Strategy ahead of Paris Climate Talks

Mexico on Friday said it will cap its greenhouse gas emissions by 2026, becoming one of the first countries to formally submit its national climate plan the

News

Is China Building a Naval Base in Africa?

Recently, The Namibian reported the existence of a "confidential letter from Namibia's ambassador to China, Ringo Abed, to Namibia's foreign minister stating that

JV Wins $2bln Freeport LNG Contract in US

A joint venture (JV) between CB&I, Chiyoda International and Zachry Industrial has won a contract worth over $2bn from FLNG Liquefaction 3 for a liquefied natural

Puerto Rico Readies for Largest Cruise Ships

Thanks to a pier expansion and enhancement, Puerto Rico will welcome the two largest cruise ships in the world, Royal Caribbean International’s Oasis of the Seas and Allure of the Seas, in 2016.

Government Update

Mexico Unveils National Strategy ahead of Paris Climate Talks

Mexico on Friday said it will cap its greenhouse gas emissions by 2026, becoming one of the first countries to formally submit its national climate plan the

Mediterranean Rescue Operations Strain Shipping

The Wall Street Journal ran a story yesterday describing how the increasing number of seaborne migrants making the journey from Africa to Europe has not only

Port of Aden Under Threat with Enemy at the Gates

As Saudi Arabia and its Arab allies stage air strikes against Shi'ite Muslim militiamen threatening to topple Yemeni President Abd-Rabbu Mansour Hadi, the southern

Offshore Energy

Nations Convene for Arctic Maritime Discussion

Citing an increasing need to ensure safety, security and stewardship of Arctic waters, member countries of the Arctic Council gathered at U.S. Coast Guard Headquarters

Advanced Drillships a Burden for Owners as Business Slows

Not so long ago, advanced drillships costing more than half a billion dollars each and capable of operating in ever-deeper waters practically guaranteed big profits for oil-rig operators.

Russia May Allow More Firms to Offshore Oil

Russia may allow more oil companies to access its offshore projects, Energy Minister Alexander Novak said on Friday.   "In general, the access can be extended," Novak told reporters in Moscow.

 
 
Maritime Careers / Shipboard Positions Naval Architecture Pipelines Port Authority Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1462 sec (7 req/sec)